| Metric | Current Period | Prior Year Period | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥1309.5B | ¥1355.1B | -3.4% |
| Operating Income / Operating Profit | ¥206.1B | ¥224.2B | -8.1% |
| Ordinary Income | ¥213.5B | ¥182.6B | +17.0% |
| Net Income / Net Profit | ¥154.8B | ¥135.1B | +14.6% |
| ROE | 2.9% | 2.6% | - |
FY2026 Q1: Revenue ¥1309.5B (YoY -¥45.6B -3.4%), Operating Income ¥206.1B (YoY -¥18.1B -8.1%), Ordinary Income ¥213.5B (YoY +¥30.9B +17.0%), Net Income ¥154.8B (YoY +¥19.7B +14.6%). Revenue declined, but operating margin was maintained at 15.7%, and Ordinary Income and Net Income rose double-digits due to a substantial reduction in non-operating expenses. Non-operating balance improved by ¥46.6B from -¥53.0B to -¥6.4B, contributed by an increase in non-operating income from ¥11.4B to ¥13.8B, while foreign exchange losses remained flat at -¥43.4B year-on-year.
[Revenue] Revenue declined to ¥1309.5B (YoY -3.4%). The core Tire Business recorded ¥1193.3B (YoY -3.6%), representing 91.1% of consolidated sales, and the Automotive Parts Business recorded ¥116.2B (YoY -1.1%), representing 8.9%. Both segments saw declines, but the decreases were limited. Cost of goods sold decreased to ¥752.2B (YoY -6.3%), a larger contraction than sales, improving gross margin to 42.6% (prior year 40.7%) up 1.9pt.
[Profitability] Operating Income was ¥206.1B (YoY -8.1%), with an operating margin of 15.7% (down 0.8pt from 16.5% a year earlier). Selling, general and administrative expenses (SG&A) increased to ¥351.2B (YoY +7.2%) despite lower sales, raising the SG&A ratio to 26.8% (from 24.2% prior year, +2.6pt), which pressured operating leverage. Ordinary Income rose significantly to ¥213.5B (YoY +17.0%), mainly due to a ¥46.6B reduction in non-operating expenses from ¥53.0B to ¥6.4B. Interest income increased from ¥3.5B to ¥4.4B, interest expense halved from ¥2.9B to ¥1.5B, and foreign exchange losses were at the same level as the prior year at ¥43.4B. Extraordinary items comprised ¥0.4B of extraordinary gains (gain on sale of investment securities) and ¥2.0B of extraordinary losses (impairment losses ¥0.9B, loss on disposal of fixed assets ¥1.1B), netting to -¥1.6B, a minor amount. Pre-tax income of ¥211.9B less income taxes of ¥57.2B (effective tax rate 27.0%) resulted in Net Income of ¥154.8B (YoY +14.6%). Comprehensive income was ¥208.9B (prior year ¥12.9B, +152.0%), with Other Comprehensive Income including ¥58.1B in foreign currency translation adjustments adding to Net Income. In summary, operating-stage results were down, but non-operating improvements drove increases in Ordinary Income and Net Income.
The Tire Business: Revenue ¥1193.3B (YoY -3.6%), Operating Income ¥200.4B (YoY -8.5%), margin 16.8% (down 0.9pt from 17.7% prior year). Automotive Parts Business: Revenue ¥116.2B (YoY -1.1%), Operating Income ¥5.7B (YoY +11.4%), margin 4.9% (up 0.6pt from 4.3%). The Tire segment, accounting for 97.2% of operating income, remains the core high-margin business but saw profit decline. The Automotive Parts segment is small but showing improving profitability.
[Profitability] Operating margin 15.7% (prior year 16.5%), Net Margin 11.8% (prior year 10.0%). Operating-stage margins declined due to higher SG&A, but Net Margin improved thanks to non-operating improvements. ROE annualized 11.6% (quarterly 2.9%), consistent with Net Margin 11.8% × Total Asset Turnover 0.71 × Financial Leverage 1.38. [Cash Quality] Non-operating income / Revenue 1.1%, Extraordinary items / Net Income -1.0%, indicating good quality of recurring earnings. [Investment Efficiency] Total Asset Turnover 0.71x (annualized, Revenue ¥1309.5B ÷ Total Assets ¥7350.3B ×4), slightly down from 0.72x prior year. Invested Capital used ¥2733.3B (Total Assets less Cash ¥1049.4B less non-interest-bearing current liabilities ¥504.0B less non-interest-bearing non-current liabilities ¥536.5B) with EBIT ¥206.1B, yielding annualized ROIC 3.0%, low. [Financial Health] Equity Ratio 72.5% (up 3.1pt from 69.4% prior year), Interest-bearing Debt ¥420.9B (short-term borrowings ¥110.9B + long-term borrowings ¥310.1B + corporate bonds ¥200.0B + bonds due within one year ¥50.0B), Cash ¥1049.4B covers interest-bearing debt 2.5x, indicating ample liquidity. Interest Coverage 140.2x (EBIT ¥206.1B ÷ interest expense ¥1.5B), showing very high interest-paying capacity. Current Ratio 323.6% (Current Assets ¥3871.1B ÷ Current Liabilities ¥1196.0B), Quick Ratio 236.0% ((Current Assets - Inventories ¥2822.2B) ÷ Current Liabilities ¥1196.0B), indicating strong short-term liquidity.
Operating Cash Flow figures are undisclosed, but balance sheet movements allow analysis of cash trends. Cash and deposits declined to ¥1049.4B (prior year ¥1172.6B, -¥123.2B). Inventories rose substantially to ¥1048.9B (prior year ¥920.4B, +¥128.5B +14.0%), indicating inventory build-up pressuring working capital. Accounts receivable decreased to ¥1196.0B (prior year ¥1365.0B, -¥169.0B -12.4%), reflecting improved collections. Accounts payable decreased to ¥302.7B (prior year ¥337.2B, -¥34.5B). Working capital changes were offsetting: inventory increase was a cash outflow, receivables decrease was a cash inflow. Property, plant and equipment slightly increased to ¥2836.2B (prior year ¥2806.8B, +¥29.4B), suggesting ongoing CAPEX. Retained earnings increased to ¥3245.9B (prior year ¥3198.9B, +¥47.0B), indicating internal reserve accumulation after dividend payments. Interest-bearing debt decreased to ¥420.9B (prior year ¥488.5B, -¥67.6B), continuing the strengthening of the balance sheet.
Operating Income ¥206.1B versus non-operating income ¥13.8B (Revenue ratio 1.1%), including interest income ¥4.4B, foreign exchange gains ¥6.4B, equity in earnings of affiliates ¥0.6B, etc. Non-operating expenses ¥6.4B comprised interest expense ¥1.5B, foreign exchange losses ¥43.4B, and other non-operating expenses ¥4.8B; net foreign exchange-related result was -¥37.0B, a volatility factor equal to -18.0% of Operating Income. Extraordinary items net -¥1.6B (=-1.0% of Net Income), minor, indicating low dependence on one-off items. The divergence from Ordinary Income ¥213.5B to Net Income ¥154.8B (difference rate 27.5%) aligns with the tax burden of 27.0%, presenting no particular qualitative concern. The difference between Comprehensive Income ¥208.9B and Net Income ¥154.8B (¥54.1B) is due to Other Comprehensive Income such as foreign currency translation adjustment ¥58.1B; these are unrealized gains/losses but contribute to equity.
Full Year (FY) forecasts: Revenue ¥6200.0B (YoY +4.2%), Operating Income ¥940.0B (YoY -3.4%), Ordinary Income ¥820.0B (YoY -19.1%), Net Income ¥540.0B. Q1 progress vs full year: Revenue 21.1%, Operating Income 21.9%, Ordinary Income 26.0%, Net Income 28.7%. Compared with standard progress of 25%, Revenue and Operating Income are slightly behind (-3.9pt, -3.1pt), while Ordinary and Net Income are ahead (+1.0pt, +3.7pt). Given the assumption of back-loaded H2, this is within an acceptable range, but higher SG&A in H1 and lower sales depressed operating-stage progress. Non-operating improvements have boosted Net Income progress. Achieving full-year targets requires sales recovery in H2, containment of SG&A, and stability in non-operating environment. No forecast revisions have been issued.
Q1 dividend ¥60 (prior year Q1 ¥60), full-year forecast dividend ¥65 (interim ¥30 + year-end ¥35). With 154,111 thousand shares outstanding and 115 thousand treasury shares, the total return on a year-end dividend basis is approximately ¥5.4B. The payout ratio vs full-year Net Income forecast ¥540.0B is 12.0% (Full-year dividend ¥65 ÷ EPS forecast ¥350.66), conservative. With Cash ¥1049.4B and Interest-bearing Debt ¥420.9B, Net Cash ¥628.5B and a strong balance sheet support dividend sustainability. No share buybacks were disclosed; shareholder returns are dividend-focused.
Working capital efficiency risk: Inventories increased 14.0% YoY to ¥1048.9B, a high level. Inventory build-up in a demand adjustment phase could lengthen the cash conversion cycle and delay operating cash generation. Inventory valuation losses or pressure to discount are also concerns.
SG&A increase risk: SG&A rose 7.2% YoY to ¥351.2B despite declining sales, pushing SG&A ratio from 24.2% to 26.8%. Fixed-cost characteristics of labor and logistics could weaken operating leverage and cause further margin deterioration if sales recovery is delayed.
FX volatility risk: Foreign exchange losses of ¥43.4B (21.1% of Operating Income) are material and a driver of non-operating fluctuation. Including the ¥58.1B foreign currency translation adjustment in Comprehensive Income, exchange rate movements impose moderate volatility on financial results. Effectiveness of hedging strategies and FX exposure management remain ongoing priorities.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 15.7% | 6.8% (2.9%–9.0%) | +8.9pt |
| Net Margin | 11.8% | 5.9% (3.3%–7.7%) | +5.9pt |
Profitability ranks in the upper tier of manufacturing, with Operating Margin and Net Margin significantly above industry medians.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth Rate (YoY) | -3.4% | 13.2% (2.5%–28.5%) | -16.6pt |
Revenue growth lags the industry median by 16.6pt, suggesting a demand adjustment phase.
※ Source: Company compilation
Maintaining profitability in the Tire Business and improving inventory efficiency are focal points. The Tire Business, with a 16.8% operating margin, accounts for 91% of sales and 97% of Operating Income, indicating business concentration. With inventories up 14.0% YoY and pressure on working capital, inventory optimization and securing shipment opportunities toward H2 are key to cash generation and margin defense. Correcting SG&A growth (+7.2%) that outpaced sales is also important.
Non-operating improvements support Net Income, but structural strengthening at the operating level is required. Ordinary Income increased 17.0% due to reduced non-operating expenses, while Operating Income fell 8.1%. Reduced interest expense and stabilization of FX results contributed, but weaker operating leverage requires both SG&A control and sales recovery. Q1 progress is below standard for Revenue and Operating Income; H2 recovery depends on improved demand and maintaining price/mix.
Financial soundness and dividend sustainability are very high, while improving capital efficiency is a medium-term theme. Equity Ratio 72.5%, Net Cash ¥628.5B, Interest Coverage 140x indicate a rock-solid financial base and room for dividends (payout ratio 12.0%). However, annualized ROIC 3.0% is low, and low Total Asset Turnover 0.71x is a bottleneck for capital efficiency. Improving inventory and receivable efficiency and enhancing returns on growth investments are conditions for shareholder value enhancement.
This report was auto-generated by AI analyzing XBRL financial statement data. It does not constitute a recommendation to invest in any specific security. Industry benchmarks are reference information compiled by the Company based on public financial statements. Investment decisions are your own responsibility; consult a professional advisor as needed.
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